Nov 17, 2013

The IoT Gets Real as Corporates Commit

2013 has witnessed a strong growth in the number of corporate initiatives that make explicit reference to the Internet of Things (IoT) in contrast to terms such as M2M and “embedded solutions”. It seems that large companies are committing to a market where much of the recent activity can be attributed to start-ups and academia.

A few weeks ago in early November, Intel demonstrated its commitment to the IoT market by creating a special division called the IoT Solutions Group, combining its Intelligent Systems Group with its Wind River acquisition. This development seems like the product of a progressive evolution in Intel’s strategy for the ‘connected devices’ market dating back to its mid-2009 acquisition of Wind River for almost US$900m.

It will be interesting to see how well Intel’s internal re-organization efforts now proceed as it develops more of an IoT market presence, especially as one of its main rivals in the mobile computing market, ARM, has also been active with its own IoT plans.

There has been a surge in corporate events motivated by IoT strategies as illustrated below. While the rates of growth of M2M and IoT corporate events is roughly of the same order of magnitude, there is some substance to back the claims of marketers that the IoT era has finally arrived.

In this light, it is hardly surprising that Intel has sought to re-focus its efforts on this emerging market. My database on corporate events in the M2M/IoT market records Intel’s first move in June of 2009 when it acquired Wind River for an estimated US$884m. Intel’s aim with this acquisition was to leverage Wind River’s software offerings for embedded devices to help of Intel grow its processor and software presence outside the traditional PC and server market segments and into embedded systems and mobile handheld devices.
Soon after, Intel added to its mobile portfolio by acquiring a Toulouse-based 3G unit of Freescale. Intel subsequently acquired McAfee and Infineon to address the growing market for connected devices.
 In 2011, Intel partnered with Deutsche Telekom to offer an M2M developer toolkit.
Then, in September 2012, Intel announced that it was orienting its activities around an IoT framework involving McAfee and Wind River capabilities. And, prior to its recent IoT Solutions Group reorganisation, Intel was joined in a collaborative IoT effort with AT&T, Cisco and GE.
ARM’s activities in the connected devices arena are much more recent and concentrated. ARM first came to attention in November 2012 with a collaborative effort with Sprint in the USA to drive IoT applications via a rapid development toolkit centered on Sprint’s USB 598 modem.

In Dec 2012, ARM launched Trustonic, a security joint venture with the SIM-vendors, Gemalto and G&D. This venture focused on developing a trusted execution environment (TEE) platform to offer a common security standard for connected devices.

2013 has turned into a very active year for ARM in developing its IoT market presence. In May, ARM and LogMeIn agreed to cooperate on LogMeIn's Xively Jumpstart Kit with the aim of reducing costs and effort required to bring IoT-based connected products and solutions to market.

The end of October 2013 culminated in a series of ARM announcements involving u-Blox (cellular development kit for IoT), Axeda (co-development of a toolkit using ARM’s mbed development platform) and Telenor Connexion (licensing of end-to-end IoT technologies).

Comparing the activities of Intel and ARM, it appears that Intel is grappling with the not insubstantial challenge of how best to package its existing assets and capabilities for the needs of IoT customers. ARM is approaching the challenge from a different angle and seemingly with fewer legacy issues. It is now actively forming market-partnerships to develop an IoT eco-system around its offerings.

Partnering, as I have written about previously, is a key strategy in the connected devices market because of the need to simplify the supply-side of the value chain for businesses that want to add connectivity to their products and services. One by-product of orchestrating the value chain is to reduce complexity and development costs.

The contrast of these approaches and some of the questions I am being asked by companies about the IoT market raise fundamental issues about workable business strategies. On the one hand, there is a temptation to repackage existing capabilities under the IoT banner. This may deliver a short term benefit to flagging marketing campaigns. Unfortunately, it misses the point about the long term potential from IoT services and the types of product and service road-maps that companies need to be thinking about in relation to long term commercial success. I will be in a position to share more on this in Q1-2014  once some on-going project work has been completed.

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